A leaked document from the US indicates a proposal for a nationalised 5G network. Who would have thought this – coming from a country where even the slightest government intervention in the market is often reported as ‘communism’?
It is nearly impossible to believe that this proposal will fly. It won’t get bipartisan support and in Australia we can all see what happens if such a large engineering project becomes politicised.
Furthermore, the powerful incumbent telecommunications companies in America will fight tooth and nail against it. 5G is not a standalone development. It has to be heavily integrated in the existing 4G networks, owned by these operators – their networks are the foundations of the proposed national 5G networks; in the end 5G is simply an extension of these networks.
The American proposal is not based on ‘what is good for the country’ but to counteract the growth of Chinese dominance in the telecoms market. In other words, it is totally politically motivated – and this is the worst basis on which to launch a national infrastructure project.
Putting the improbability of the proposal actually coming to fruition aside, it is interesting to link this to some of my previous analyses regarding the future of the mobile market.
5G will depend heavily on a nationwide fibre optic backbone network, a network that will reach deep into cities, towns and suburbs – basically a fibre-to-the-street network. Some rough estimates are that in the USA over a million 5G access points will need to be developed and connected to this (mainly fibre) backbone. More remote areas might still be connected by microwave backbone connections.
The question for America – as for all other countries – is how much of this overall network can be based on competitive infrastructure? It is highly unlikely that multiple fibre optic networks are an economically viable option. A positive in this respect – emerging from what I believe is otherwise a negative situation – is that the American fixed telecoms market is basically one established on geographic monopolies, and so the overbuilding of fibre optic networks will be less of an issue.
So, while the proposal of a nationalised 5G network will most probably not fly, it will open up the broader discussion about how to best advance telecoms in the USA.
Another aspect that I discussed in previous analyses is that a 5G network is basically a fixed network with a relatively small element of wireless technology added to provide end-user access to the network.
This will require a holistic look at the total telecoms market, in relation to both the fixed and the mobile networks. At present the two are totally separated, with separate legislation and separate regulations, but this will be untenable moving forward.
Who knows? This proposal could trigger a review of the total telecoms market, whereby broadband is reclassified as telecommunications rather than its current classification as content. This in turn could allow for a more rational approach to telecoms, where broadband will also be opened up to retail providers; and this will increase competition and make net neutrality rules unnecessary.
The issue of developing the national backbone network – for both fixed broadband and 5G mobile broadband access – could resolve itself based on the already mainly geographic nature of these networks in the country, and would avoid the issue of overbuilding. They could function mainly as wholesale backbone networks, and indeed, based on such a holistic approach to telecoms, the USA could start regaining its former leading position in the telecommunications market.